WASHINGTON, D.C. — When the United States finalized negations on the Trans-Pacific Partnership (TPP), it resulted in newly opened markets in several countries and expanding exports for food and agricultural products from the United States.
The agreement also ended nearly five years of intense negotiations, according to representatives of the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council. Details of the final agreement are slowly emerging, and NMPF is examining them to assess overall impact on the U.S. dairy industry.
NMPF representatives said the dairy negotiations were among the most difficult and contentious aspects of TPP talks, and it was one of the last pieces wrapped up, and that over the duration of negotiations the group worked to best position U.S. interests.
According to statistics provided by the USDA, the agreement will help the nation respond to regional and bilateral trade agreements already in place or being negotiated by competitor countries. In 2014, the United States exported $3.6 billion worth of dairy products to the TPP region and $7.1 billion to the world. The TPP agreement promises to expand those opportunities and provide new markets.
When the TPP effort began, NMPF officials opined it was little more than a façade for a free trade agreement with New Zealand. Given the uniquely consolidated structure of that country’s dairy industry, NMPF articulated strong concerns about the prospect of creating a one-way trade agreement with New Zealand.
Eventually, in response to recommen-dations from NMPF and others, countries with more significant dairy markets – Canada and Japan – were added to this agreement. Those decisions created new opportunities for U.S. dairy in TPP that previously had not been possible.
As a result, Japan’s 40 percent cheese tariffs will be eliminated in 16 years, with whey duties eliminated in 6 to 21 years, depending on the type. Additionally, Japan will immediately eliminate its 8.5 percent tariff on lactose and lactose syrup and its 2.9 percent tariff on milk albumin containing whey protein.
For butter and milk powder, two TPP-wide TRQs (tariff-rate quota) of 3,188 tons each will be created and grow respectively to 3,719 tons over 5 years. Japan will also create new TPP-wide TRQs for condensed and evaporated milk.
Canada will eliminate its tariff on milk protein substances upon entry into force, and on whey powder over 10 years with a duty-free TRQ during the transition. It will also eliminate its tariff on margarine over five years. For all other dairy products, Canada will establish new permanent TRQs, which will grow for an additional 13 years after they reach their fully agreed-upon quantities.
Nearly all of Malaysia’s tariffs on dairy products, currently as high as 5 percent, will be eliminated immediately. All of Vietnam’s tariffs on dairy products, up to 20 percent, will be eliminated in five or fewer years.
The United States will eliminate tariffs on dairy products from Malaysia and Vietnam within 10 years; eliminate its tariffs on ice cream and infant formula for Australia and New Zealand; and eliminate its tariffs on artisanal cheeses for Canada. U.S. tariffs on milk powders will be eliminated over 20 to 30 years for New Zealand and Australia and on one cheese tariff line each for New Zealand and Australia.
Safeguards will be established for these products. For all other dairy products subject to TRQs, the United States will establish new TRQs for New Zealand and Canada. The TRQs for Canada have growth provisions similar to those established by Canada for the United States.
For New Zealand, the TRQs have quantities and perpetual growth elements comparable to those established in the U.S.-Australia free trade agreement (FTA). For Australia, existing preferential access available under this FTA for products such as butter, cheese, evaporated and condensed milk and other dairy will be transferred to new perpetual dairy TRQs to be created under the TPP.
NMPF officials say they are still evaluating the extent of those new opportunities in the final package, as well as the degree of new domestic dairy competition the U.S. government has agreed to with Australia and New Zealand. NMPF is withholding judgment on the final agreement until it is able to review the specifics.
"Based on information available to date, it appears that our industry has successfully avoided the type of disproportionate one-way street that we were deeply concerned could have resulted under this agreement," said Jim Mulhern, president and CEO of NMPF. "New Zealand did not get the unfettered access to the U.S. market that it long sought, but Japan and Canada did not open their markets to the degree we sought."
According to the NMPF, its assessment of the final agreement’s merits will hinge on careful analysis of its freshly agreed-upon dairy details. But officials were quick to say the outcome for the U.S. dairy industry would not have fared as well if not for strong support from legislators on both sides of the aisle.
